FINDING THE RELEVENCE OF ACCOUNTING FOR MANAGERS SUBJECT IN PRACTICAL FIELD BY GRUP NO-4 Roll no 02,...

FINDING THE RELEVENCE OF ACCOUNTING FOR MANAGERS SUBJECT IN PRACTICAL

FIELD

BY GRUP NO-4

Roll no 02, 11, 13,19

FINDING THE RELEVENCE OF ACCOUNTING FOR MANAGERS SUBJECT IN PRACTICAL FIELD

Objectives:

To analysis the present course

To highlight the practical knowledge acquired upon completing the course

To find out the relevance of the teachings with the practically used methods

CORRELATION BETWEEN STEEL USE AND GDP GROWTH

Every org either be it a public or private Ltd company has its own style of doing things.

Similarly each org maintains its financial records in its own way.

Again in the course curriculum in BUP for EMBA-2 students subjects accounting for managers was taught.

Now to find out the practical applicability of this subject different audit and financial reports of any organization need to be analyzed.

To find the relevance of the teaching and the practically flowed methods of maintaining financial records

Introduction


In our MBA-2 class we have learnt two types of accounting namely Financial Accounting and Managerial Accounting. In the financial accounting we have learnt the following:

Company Income statement

Company balance sheet Statement of stockholder equity Statement of cash inflow and outflow. Preparation of T account for transaction Journal entry Posting into the final ledger

COURSE ANALYSIS


In the managerial accounting we have learnt basically JOB Order costing and process costing.

Under Job order costing the following subjects covered:

Classification of costs like, direct material, direct labour, manufacturing overhead and non manufacturing costs like, marketing and selling costs and administrative costs.

comparison between merchandising company and manufacturing company and their preparation of income statement, costs of goods manufactured for the year ending, T accounting and journal entry process

Managerial accounting


In the Process Costing accounting we have learnt the following subjects:

Differences between job order and process costing Equivalent Units of Productions Weighted Average method Production report

Process costing Account


PROPERTY AND ASSETS

2007 2008 Notes Taka Taka

Cash 4 In hand 219,714,704 279,733,998(including foreign currencies)

Balance with Bangladesh Bank and its agent bank (including foreign currencies)

Balance with other banks Financial Instructions 5In Bangladeshoutside Bangladesh

CASE STUDY –BANK ASIA AUDIT REPORT PRESENTED BEFORE AGM-2009

Balance Sheetas at 31 December 2008


PROPERTY AND ASSETS

2007 2008 Taka Taka

Money at call and on short notice 6Investments 7

GovernmentOthers

Loans and advances/investments 8 Fixed assets including premises, furniture and fixtures 9Other assets Non - banking assets Total assets




LIABILITIES AND CAPITALLiabilities

Borrowings from other banks, financial institutions and agentsDeposits and other accounts 12Current/Al-wadeeah current accounts and other accountsBills payableSavings bank/Mudaraba savings bank depositsFixed deposits/Mudaraba fixed depositsBearer certificates of depositOther deposits

Other liabilities 13Total liabilities




Capital/Shareholders' Equity

Paid up capital 14.2 Share premium 15Statutory reserve Revaluation reserve 16 Exchange equalization reserve Retained earnings 17Total shareholders' equity (S/E)Total liabilities and S/E 53,371,247,063 / 38,427,853,094




Off-Balance Sheet Items

Contingent liabilities2007 2008Taka Taka

NotesContingent Liabilities 18 ---Acceptances and endorsementsLetters of guaranteeIrrevocable letters of creditBills for collectionOther contingent liabilities19,627,928,632 / 14,067,628,128

Recent Trend cont---


Comments: The other liabilities like contingent liabilities and other liabilities have been shown as off balance sheet items and other commitments which we have not come across in our classes. There are many terms which are newer to us than what we have learned from the book. In case of depreciation Bank Asia followed the fixed depreciation on 5% on land and 20% in our case we have learned to calculate the depreciation based on expected service life and initial cost. Here the adjustment is simpler than what we have learned in our class. They have just deducted accumulated cost from the cost of the asset and they have shown the asset after adjustment.




Basis of preparation

Statement of compliance

The financial statements of the Bank have been prepared in accordance with :

Bank Companies Act 1991 other Bangladesh Bank Circulars, Bangladesh Accounting Standards (BAS) Bangladesh Financial Reporting Standards (BFRS) Companies Act 1994, Securities and Exchange Rules 1987 other prevailing laws and rules applicable in Bangladesh.





Basis of measurement:

The financial statements of the Bank have been prepared on the historical cost basis except for the following:

- Government Treasury Bills and Bonds (HFT) at present value using marking to market concept

- Government Treasury Bills and Bonds (HTM) at present value using amortization concept

- Zero Coupon Bond at present value using amortization concept- Quoted ordinary shares at cost or market price whichever is lower at balance sheet date




Functional and presentation currency:

These financial statements are presented in Bangladesh Taka

Use of estimates and judgments

The preparation of financial statements requires :

Management to make judgments

Estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ

from these estimates

Estimates and underlying assumptions




Preparation of the report

• Bonus share received as dividend had previously been recognized as income in the profit and loss account. In the year 2008 this has been corrected and previous year’s balance has been restated as per BAS 8.

• During the year 2007 income on treasury bills and bonds had been recognized as income using day count basis. At the end of 2007 such bills and bonds had been revalued using present value method.

• During the year 2007 loans and advances and interest receivable respectively had not been considered for deferred tax calculation purpose. In the year 2008 the items have been considered and previous year’s balance has been restated as per BAS 8.




Deferred tax on temporary difference of depreciation of fixed assets had been calculated using income statement method

The Bank had been presenting proposed dividend “both stock and cash” for prior year separately on the face of the balance sheet and statement of changes inequity instead of disclosing by way of a note to the financial statements

.




Preparation of Cash flow statement

Cash flow statement has been prepared in accordance with the Banking Regulation and Policy Department of Bangladesh bank

Statement of liquidity

The liquidity statement of assets and liabilities as at the reporting date has been prepared on residual maturity term as per the following basis:

Balance with other banks and financial institutions money at call and on short notice

Investments are on the basis of their maturity terms

Loans and advances/investments are on the basis of their repayment schedules




Statement of Liquidity-----cont

Fixed assets are on the basis of their useful lives

Other assets are on the basis of their realization /adjustments

Borrowings from other banks, financial institutions and agents as per their maturity/repayment terms

Deposits and other accounts are on the basis of their maturity terms and behavioral past trend

Other liabilities are on the basis of their payment/ adjustments schedule




Basis of consolidation

A separate set of records for consolidation of the statement of affairs and profit and loss account of the branches including Islamic banking unit and Off-shore banking unit are maintained at Head Office of the Bank based on which these financial statements have been prepared

Foreign currency

Foreign currency transactions are converted into equivalent Taka currency at the ruling exchange rates on the respective dates of such transactions.




End Summary of Case Study:

In case study we have closely monitored the procedures followed by Asia bank. We have seen a number of transactions were unknown or unfamiliar to us. We have also seen the procedures followed by the auditing team is different from what we have learnt in our accounting subject. In balance sheet there is also change in the format also. In book we didn’t come across the term off balance sheet items

Adjustment of loans have been adjusted on maturity basis not as a monthly rate basis as we have learnt to adjust to different accrued and deferred items in the financial statement




COMPARION

Comparison between theoretical based knowledge and practically followed method by the BANK ASIA PVT LTD on the following subjects are given below:

Income Statement. In the bank Asia report we have seen term has been used as cash flow statement rather mentioning it as a income statement. The transactions are lot of varieties and there is method showing the determination of income out of the maturity basis.


In book we have come across a limited number of transactions and we have also learned lot of transactions which are quite new to us The other liabilities like contingent liabilities and other liabilities have been shown as off balance sheet items and other commitments which we have not come across. in our classes. There are many terms which are newer to us than that we have learned from the book. In case of depreciation Bank Asia followed the fixed depreciation on 5% on land and 20% in our case we have learned to calculate the depreciation based on expected service life and initial cost. Here the adjustment is simpler than what we have learned in our class. They have just deducted accumulated cost from the cost of the asset and they have shown the asset after adjustment.

Balance Sheet.

Comparison on Balance Sheet


COMPARION on Stock Holder’s Equity

. The Bank had been presenting proposed dividend “both stock and cash” for prior year separately on the face of the balance sheet and statement of changes in equity instead of disclosing by way of a note to the financial statements. From this year comparative figures have been rearranged as per BAS-1 and BAS-10.How dividend are forecasted has been shown in the change of stock holder’s equity report


Comparison on Statement of Cash Inflow And Out Flow.

Here the details procedures for cash inflow and outflow has been shown The liquidity statement of assets and liabilities as at the reporting date has been prepared on residual maturity term as per the following basis:

a) Balance with other banks and financial institutions, money at call and on short notice are on the basis of their maturity terms

b) Investments are on the basis of their maturity termsc) Loans and advances/investments are on the basis of their

repayment schedulesd) Fixed assets are on the basis of their useful livese) Other assets are on the basis of their realization /adjustmentsf) Borrowings from other banks, financial institutions and agents as

per their maturity/repayment termsg) Deposits and other accounts are on the basis of their maturity

terms and behavioural past trendh) Other liabilities are on the basis of their payment/ adjustments

schedule


Comparison on Statement of Cash Inflow And Out Flow.

These are elementary entry given in the software in the banking activities. The entry of journal is totally different what we have learned from the book. The entry is software based. However, for developing software one must understand the journal entry procedures.


Comparison on LEDGER ENTRY

This is also the same as we have discussed for Journal entry also. However we learned form our colleagues that banks are using software’s for all these maintaining ledgers and ledger entry. However banks maintain some form of daily entry manually


8.0 Conclusions.9.1 The subject was basically designed to develop basic skills to the

EMBA students so that they can easily assimilate the application of mathematical techniques in solving the business related problems,

This paper is basically looked for the theoretical knowledge we have developed in the classes and finding the relevance in finding the practically followed methodology in maintaining the financial transactions and statements.

Managers are useful tools in understanding the transactions and preparation of balance sheet, income statement, Cash inflow and outflow statement of any private companies.


8.0 Conclusions.

For better understanding of the subject we have taken a case study of the Bank Asia and we have closely monitored the different transaction procedures outlined there. We have seen the basic concept we have developed from the subject taught in EMB2 classes is much helpful in understanding all these statement related to transactions of the company. However there are prescribed rules and format from Bangladesh banks by which the different statement has been prepared. The other liabilities like contingent liabilities and other liabilities have been shown as offset balance sheet items which is a different from our class room learning.

.


Recommendations

Students undergoing courses on “Accounting for Managers” in BUP may be arranged visit to private company in order to find out the methodology followed by different companies in maintaining different financial transactions..

.


CONSUMPTION SECTORS:

Bridge and Culverts

Railways

Port development

Bus/train station terminal

Power transmission facilities

Tele-communication facilities

Steel Consumption In Infrastructure Development

FINDING THE RELEVENCE OF ACCOUNTING FOR MANAGERS SUBJECT IN PRACTICAL FIELD BY GRUP NO-4 Roll no 02,...

Documents

Transcript of FINDING THE RELEVENCE OF ACCOUNTING FOR MANAGERS SUBJECT IN PRACTICAL FIELD BY GRUP NO-4 Roll no 02,...